Income Tax Appellate Tribunal - Indore
Assistant Commissioner Of Income Tax vs Dr. Smt. Ujjawala Sharma. (Dr. Smt. ... on 6 January, 1995
Equivalent citations: (1997)57TTJ(INDORE)532
ORDER
O. P. JAIN, J. M. :
These appeals and cross-objections arise out of the consolidated order of the Dy. CIT(A), dt. 7th May, 1993, pertaining to the asst. yrs. 1989-90 and 1990-91. After hearing the learned representatives of the parties, they are being disposed of as under :ITA No. 796/Ind/1993
2. In ground No. 1 of the appeal, objection is taken to the relief allowed by the Dy. CIT(A) out of the expenditure incurred on purchase of medicines. The assessee is a young medical practitioner. It has been stated by the learned Advocate for the assessee that the assessees standing was hardly of about one year. Search and seizure operations were carried out at the premises of the assessee on 30th Jan., 1990. During search operations certain papers and diary were found. In the assessment proceedings, the assessee had claimed an expenditure of Rs. 38,000 on purchase of medicines. The AO noted that the total of the expenditure as noted in the diary comes to Rs. 32,128. It also includes the expenditure of Rs. 1,866 for which the bill appeared in the name of the assessees husband, who is also a doctor by profession. Hence the AO allowed the expenditure only to the tune of Rs. 30,262 and made an addition of Rs. 7,738. The assessee appealed before the Dy. CIT(A). He found that the total of the expenditure recorded by the assessee comes to Rs. 35,486. He also noted that in such expenditure, the assessee has also included some expenditure, which was incurred for purchase of medicines for the members of the family. He, therefore, allowed expenditure to the extent of Rs. 35,000 and restricted the disallowance to Rs. 3,000. Aggrieved, the Revenue is in appeal before the Tribunal.
3. On the other hand, the assessee has filed cross-objection with regard to disallowance sustained by the Dy. CIT(A).
4. The learned Departmental Representative has placed reliance on the reasons given by the AO for making the disallowance. On the other hand, the learned Advocate for the assessee has submitted that the AO has wrongly calculated the expenditure at Rs. 32,128 and the calculation has been rightly made by the Dy. CIT(A) at Rs. 35,486. He has, however, submitted that vouchers were not available for the entire expenses. Since the assessee was fresh in the profession, she could not maintain all the bills, nor proper accounts were maintained. He admitted that the expenditure of Rs. 38,000 was shown by estimate. According to him, the same is moderate, reasonable and deserves to be allowed.
5. I have considered the rival submissions. It is the accepted position that vouchers/bills for all the purchase made were not available with the assessee. Even the recorded expenditure works out to Rs. 35,486. The expenditure by the assessee was shown by estimate and the same, therefore, cannot be taken as exact. Looking to all these facts, I am of the opinion that the estimate made by the Dy. CIT(A) is reasonable and calls for no interference.
6. The next ground relates to the relief allowed by the Dy. CIT(A) out of miscellaneous expenses. The assessee had shown expenses at Rs. 37,500 under various heads. The assessee was running her clinic at her residence. The assessing officer, therefore, disbelieved the assessees version about expenses and allowed an expense of Rs. 12,000 only resulting in an addition of Rs. 25,500.
7. In the first appeal, it was submitted for the assessee that the expenditure claimed by the assessee is reasonable and not excessive. Considering the submissions of the assessee, the Dy. CIT(A) allowed the following expenses :
Rs.
(i) Salary 7,800
(ii) Conveyance 6,000
(iii) Stationery and journals 5,000
(iv) Repairs/Maintenance including whitewashing 2,500
(v) Misc. expenses including wages of spares and washerman, etc. 6,000
8. The Dy. CIT(A) had sustained the disallowance out of the stationery and journals expenses at Rs. 1,600 and out of repairs/maintenance at Rs. 700. He had also sustained the disallowance of Rs. 4,900 claimed to have been spent on purchases of instruments.
9. The learned Departmental Representative has argued that no evidence about incurring the expenditure under the various heads was furnished by the assessee and as such the AO was justified in allowing the expenditure of Rs. 12,000 by estimate. According to him, the estimate made by the AO is reasonable. On the other hand, the learned Advocate for the assessee has submitted that the expenditure claimed was reasonable. He has pointed out that various expenses were noted in the diary, extract of which has been filed at pages 23 and 24 of the compilation. He has, however, admitted that entries were not complete and the expenditure was shown by estimate.
10. I have considered the submissions of the parties. In my opinion, the estimate of the expenses as made by the Dy. CIT(A) is appropriate and as such this ground has to be rejected.
11. Ground No. 3 of the appeal does not relate to the assessment year under consideration. Hence, it is rejected.
12. In the result the appeal is dismissed.C. O. No. 94/Ind/1993
13. In this cross-objection, the assessee objects to the disallowance of Rs. 3,000 from the claim for the purchase of medicines. The issue has already been dealt with in the appeal filed by the Revenue. In my opinion, the estimate made by the Dy. CIT(A) is appropriate and as such this ground is rejected.
14. In the next ground, objection is taken to the disallowance of Rs. 7,200 from the claim of expenses. As already noted in the Revenues appeal the Dy. CIT(A) has sustained the disallowance of Rs. 1,600 out of stationery and journal expenses and Rs. 700 out of repairs expenses. The expenditure was claimed by estimate. Proper vouchers were not available. In the given situation, the estimate made by the Dy. CIT(A) appears to be appropriate. I, therefore, uphold the disallowance on these two counts.
15. The Dy. CIT(A) has also sustained the disallowance of Rs. 4,900. This amount was claimed to have been spent on purchase of instruments. The assessees claim was rejected by the Revenue authorities for the reason that no evidence was produced for purchase of the instruments. The findings of the Revenue authorities are being challenged by way of cross-objections.
16. After hearing the learned representatives of the parties, I am of the opinion that the assessee must succeed on this ground. Admittedly, the assessee is a doctor by profession. He had a standing of only one year. It is reasonable to expect that the assessee must have purchased some instruments, which are required for professional purposes. The expenditure claimed does not appear to be heavy or unreasonable. I, therefore, accept the assessees claim on the point and delete the disallowance to the tune of Rs. 4,900.
17. In the result the cross-objection stands partly allowed.ITA No. 797/Ind/1993
18. The first ground relates to the relief allowed out of expenditure on purchase of medicines. The total expenditure was shown at Rs. 31,358. The AO had allowed the expenditure only to the tune of Rs. 20,000. On appeal, the Dy. CIT(A) has allowed the expenditure to the tune of Rs. 32,000. Dissatisfied, both the sites are before the Tribunal.
19. The arguments advanced by the parties are the same as in the appeals pertaining to the asst. yr. 1989-90. After considering the submissions advanced by the parties, I am of the opinion that the estimate of the expenses as made by the Dy. CIT(A) is appropriate.
20. Ground No. 2 of the appeal relates to the misc. expenses. In the first appeal, the Dy. CIT(A) has allowed all the expenses claimed by the assessee except sustaining the disallowance of Rs. 1,000 out of repairs/maintenance expenses. After considering the submissions advanced by the parties, I am of the opinion that the estimate of expenses made by the Dy. CIT(A) is appropriate.
21. The next ground relates to the addition made on account of cash found during the search operation. An amount of Rs. 17,334 was found at the time of search. Out of it a sum of Rs. 15,000 was seized. In order to explain the same, the assessee had filed a cash flow statement wherein the opening cash balance was shown at Rs. 8,000. The assessee had claimed receipts of Rs. 3,000 on various festivals like Rakhi, Bhai Duj and birthday of children and marriage anniversary. The AO has noted that the assessee has withdrawn only Rs. 5,000 for household purposes and only Rs. 7,000 were withdrawn by her husband. He disbelieved the cash flow statement and added the sum of Rs. 15,000.
22. In the first appeal, the Dy. CIT(A) has deleted the addition. He was of the opinion that since the assessee is doctor by profession, it is reasonable to expect that she would have some cash available at her residence.
23. Challenging the findings of the Dy. CIT(A), the learned Departmental Representative has argued that no evidence was furnished by the assessee to prove the source of the cash available with her and as such the addition made was justified. On the other hand, the learned counsel for the assessee has supported the order of the Dy. CIT(A).
24. Having considered the submissions, I am inclined to agree with the reasons given by the Dy. CIT(A) for deleting the addition. Hence, this ground of appeal is rejected.
25. In the result the appeal is dismissed.C. O. No. 95/Ind/1993
26. The first ground relates to the addition on account of professional receipts. The gross receipts were shown at Rs. 98,000. The AO estimated such receipts at Rs. 1,05,000. In the first appeal, the Dy. CIT(A) has estimated such receipts at Rs. 1 lakh. It is the contention of the assessee that professional receipts shown by the assessee should have been accepted. On the other hand, the learned Departmental Representative has supported the order of the Dy. CIT(A).
27. Having considered the submissions advanced by the parties, I am of the opinion that the gross receipts shown by the assessee cannot be said to be on the lower side. In the immediately preceding year, the gross receipts were estimated at Rs. 96,100. I, therefore, direct that the gross receipt as shown by the assessee should be accepted.
28. In ground No. 2, objection is taken to the disallowance of Rs. 1,500 sustained by the Dy. CIT(A) out of expenses pertaining to the purchase of medicines, etc. This point has already been considered in the appeal filed by the Revenue. In my opinion, the disallowance sustained by the Dy. CIT(A) is appropriate.
29. The next ground relates to the disallowance of the relief under s. 80C of the Act.
30. The assessee during the year under consideration had made some investment in unit linked insurance policy and purchase in NSC. The amount was invested after making borrowings from her husband and as such the deduction claimed under s. 80C of the Act was denied by the Revenue authorities.
31. The learned Advocate for the assessee has submitted that the amount was temporarily borrowed by the assessee from her husband and later on the same was repaid. He has, however, submitted that the assessee had adequate income to make the investment in question but the need to borrow the money arose because the sum of Rs. 15,000 belonging to the assessee was seized by the Department and the same had not been released by the time the amount was invested. He has pointed out that the amount was invested in the last week of the month of March and in order to avail the deduction under s. 80C, it was necessary to make investment in that month. According to him, the investment made is attributable to the assessees income chargeable to tax and as such the deduction claimed should have been allowed. On the other hand, the learned Departmental Representative has argued that the deduction claimed cannot be allowed because the investment was made out of borrowed funds.
32. I have considered the rival submissions. It is not in dispute that income of the assessee chargeable to tax during the year under consideration was adequate to make the aforesaid investment. Since the sum of Rs. 15,000 was seized by the Department, the assessee had no liquid funds for the purpose and she had borrowed money from her husband. In such a situation, it cannot be said that the investment made cannot be attributed to the income chargeable to tax. In my opinion, the deduction has been wrongly denied to the assessee and I hold accordingly.
33. In the result the cross-objection stand partly allowed.